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‘Absolute positive’ rescue package set to trigger big China stock rally: Wall Street banks
The measures are unprecedented as they underscore Beijing’s determination to stabilise the market and boost investor confidence, experts say
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China’s boldest stock market rescue package since the 2015 meltdown has led some Wall Street banks and money managers to believe that Beijing is serious about tackling the slump and that the nation’s battered stocks are set to stage a relief rally in anticipation of more measures.
A combined 800 billion yuan (US$114 billion) in stock-buying facility from the central bank’s balance sheet, together with policy rate cuts, reserve ratio reductions and other supportive measures are “unprecedented in their format in recent China stock market history”, underscoring Beijing’s determination to stabilise the market and boost investor confidence, they said.
“We take the announced measures as an absolute positive move given their unprecedented nature and the unlimited funding promised,” Laura Wang, equity strategist at Morgan Stanley said in a note on Tuesday.
“Surprise market support measures by the PBOC [People’s Bank of China] should help improve investor sentiment and liquidity, and push both onshore and offshore markets to react positively in the near term.”
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